You can get full ATX formfactor cases that don't stick out at all.
(lower right)
I still find media PCs clunky and awkward to interface with. Until I get a nice HDTV or LCD TV, I'm not going to futz with one again. The display is the biggest problem... unless you have a nice display upon which to read the text, you're stuck squinting at fuzzy words and images.
If you're looking for
just audio, you might try getting a
Squeezebox. It does FLAC, OGG, MP3, WMA, and pretty much everything else (probably not SHN, though) and can interface with a universal remote control or a browser (for advanced management). The one drawback is that it cannot, as of yet, do 24/96.
I just ordered one yesterday. I'll make a thread about it once I've put it through its paces.